Government Revenue

12 Key excerpts on "Government Revenue"

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  Public Finance Administration

  • B. J. Reed, John W. Swain(Authors)
  • 1996(Publication Date)
  • SAGE Publications, Inc

    (Publisher)

  C H A P T E R Public Revenues R evenues are resources—principally money but also land, equipment, facilities, and labor—gathered by public organizations. Revenues are gathered primarily to enable public organizations to act. Revenue gathering enables public organizations to act through expenditure of resources. Other purposes include regulating behavior, allocating resources, distributing costs and benefits, and, for the federal government, regulating the national economy. Both recognized and self-proclaimed experts write much on revenues. Some economists specialize in studying revenues. Many accountants special-ize in helping individuals and businesses legally avoid contributing greatly to the revenues of public organizations. Here, a nonspecialized approach focuses on revenue concepts, sources, evaluative criteria, and the pattern of public revenues in the United States. • REVENUE CONCEPTS The most important revenue concepts include revenue, revenue measure, tax, base, base measurement, exemption, deduction, rate, revenue liability, credit, revenue structure, revenue expenditure, delinquency, incidence, pro-gressivity, elasticity, nonneutralities, and earmarked revenues. Revenue Measure A revenue measure is a specific law, policy, regulation, or program for gaining revenue. Governments, for example, have laws that authorize revenue collection. Without legal authorizations, governments cannot collect reve-nues. Similarly, nonprofit organizations develop policies and plans and make specific decisions for gathering revenues. Revenues do not appear magically; specific efforts must be made to gather them. 72 Public Revenues Tax A tax is a required payment. Taxes are involuntary in the sense that govern-ments compel payment. If individuals do not pay taxes, money and other assets can be legally taken from them, and they can also be penalized through civil and criminal court actions.

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  Government at a Glance 2013

  • OECD(Author)
  • 2013(Publication Date)
  • OECD

    (Publisher)

  GOVERNMENT AT A GLANCE 2013 © OECD 2013 68 3. PUBLIC FINANCE AND ECONOMICS General Government Revenues Governments collect revenues mainly for two purposes: to finance the goods and services they deliver to citizens and businesses and to fulfil their redistributive role. Major sources of revenues of governments are taxes collected from households and corporations as well as social contributions. Comparing levels of Government Revenues across OECD member countries, as a share of GDP or per capita, provides an indication of the importance of the public sector in the economy in terms of available financial resources. The total amount of revenues collected by governments is determined by past and current political decisions that are themselves based on cultural expectations for social redistribution, fiscal constraints and economic fluctuations and perfor-mance. As such, levels of Government Revenues strongly differ across OECD member countries. In 2011, general Government Revenues represented 41.9% of GDP on average across OECD countries, a level only 0.2 percentage points higher than a decade earlier (41.7% in 2001). The levels collected across countries vary signifi-cantly, from 57.3% in Norway to 22.7% in Mexico. Nordic countries tend to collect higher revenues than other groups of countries, as most of their social benefits to households are taxable. Although Government Revenues as a share of GDP remained stable across OECD member countries between 2001 and 2011, there were significant fluctuations across countries. They increased the most in Hungary (10.1 percentage points) and in Portugal (6.6 percentage points), although this increase occurred mostly since 2009 for both countries in response to the fiscal crisis in those countries. Government Revenues as a share of GDP decreased the most during the same period in Israel (7.3 percentage points) and Sweden (4.9 percentage points), although in Israel they rose between 2009 and 2011.

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  Handbook of Governmental Accounting

  • Frederic Bogui(Author)
  • 2008(Publication Date)
  • Routledge

    (Publisher)

  Census Bureau, Government Division. http://www.census.gov/govs/www/ Expenditures and Revenues in U.S. Governments  139 services and income maintenance” is another major item in local budgets. In recent years, local governments have spent more on welfare programs, mostly though intergovernmental grants. In addition, many local governments own hospitals or other health care facilities and administer many public health programs locally. 3.3 Revenues 3.3.1 Overview: Revenue Sources in the United States U.S. governments collect most of their “general” revenues from taxes that are levied on income, purchases or sales, or property (ownership or transfer). In addition, they collect revenues from user charges and from miscellaneous sources, such as lotter-ies, interest on invested funds, royalties, etc. (Mikesell, 2003). While governments also receive revenues from business-like activities such as liquor stores, utility opera-tions, or insurance programs, these revenue sources are traditionally categorized as “special” revenues. Although all levels of government collect revenues from a variety of sources, generally speaking, the federal government relies primarily on income taxes, state governments on sales taxes, and local governments on property tax. In addition, the federal government relies on taxes to a greater extent, while state and local governments raised a higher portion of revenues from user charges or other sources. Of all general revenues collected in fiscal year 2003, the federal government col-lected 57%, the states 23%, and local governments 20% (Office of Management and Budget, 2006). In terms of direct expenditures, however, the percentage is 45 for federal government, 25 for states, and 30 for local governments (Office of Management and Budget, 2006). The difference occurs because a substantial frac-tion of state and local government expenditures is financed by intergovernmental grants, which will be discussed separately.

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  Fiscal Administration

  • John Mikesell(Author)
  • 2017(Publication Date)
  • Cengage Learning EMEA

    (Publisher)

  As a small burden badly placed may distress a horse that could carry with ease a much larger one properly adjusted, so a people may be impoverished and their power of producing wealth destroyed by taxation, which, if levied in any other way, could be borne with ease.” 3 Even if you are not familiar with horses under stress, you can understand the idea. Care in structuring the tax is as important as the amount of tax itself. Taxation in the United States: A Brief Overview of the Systems Governments in the United States collect most of their own-source general revenue from taxes on income, purchases or sales, or property ownership or transfer, as Table 8–1 shows. 4 For all governments, 55.4 percent of general rev-enue came from taxes, or 70 percent of own-source revenue. Revenue from user charges and from miscellaneous sources (these include lotteries, interest on invested funds, royalties, profits earned by the Federal Reserve System, etc.) play a relatively small role in financing general government. Intergovernmental revenue (transfers from other governments) make a substantial contribution to general revenue. Special revenue, shown at the bottom of the table, includes the substantial collections from the payroll tax that funds the federal insurance trust system. This federal payroll tax for Social Security and Medicare is the 3 Henry George, Progress and Poverty (1879), Book VIII, Chap. 3. Online edition: http://www.econlib.org/ library/YPDBooks/George/grgPP.html. 4 Own-source general revenue excludes (1) revenue from intergovernmental aid and (2) revenue from liquor stores, utility operations, or insurance programs (e.g., Social Security or unemployment compensa-tion). The first exclusion takes out revenue that has been transferred from other governments and, hence, does not come from the government’s own revenue system; the second excludes revenue from special operations of the government.

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  Financial Planning and Management in Public Organizations

  • Alan W. Steiss, Emeka O. Nwagwu, Alan W. Steiss, Emeka O. Nwagwu(Authors)
  • 2001(Publication Date)
  • Routledge

    (Publisher)

  2 Revenues and Expenditures in the Public Sector Historically, the United States has relied on a mixed private-public economic sys­ tem. The national economy is built primarily on the private sector—on the “invis­ ible hand” of supply and demand in the marketplace—with the public economy invoked when the market system fails to satisfy significant social goals. 1 RATIONALE FOR PUBLIC SECTOR ECONOMICS Economic activities in the public sector include (1) the provision of public goods and services (e.g., parks and recreational facilities, primary and secondary edu­ cation, public health facilities and programs), (2) the allocation and distribution of resources (public welfare, differential incidence in the costs and benefits of public programs), (3) correction of market imperfections, including natural mo­ nopolies and externalities, and (4) the provision of collective risk (including public safety, national security and defense). Each of these factors plays a role in defining the fiscal responsibilities of local government. 1.1 Provision of Public Goods and Services Public goods and services are generally those that cannot be effectively supplied by the marketplace because private entities cannot exact a price for each unit of benefit sufficient to cover the costs. The costs of public goods must be subsidized 35 36 Chapter 2 through other sources of revenues. Direct payments are largely voluntary (as with “contributions” in support of some public service), and some consumers are “free riders.” Government assumes production of public goods or services when they are undersupplied or unsupplied, and exacts a price from consumers in the form of taxation. Once supplied, no one can be excluded from accessing the ben­ efits of a public good. 1.2 Allocation of Resources Public sector policies address the allocation of resources—the distribution of wealth, stabilization, and growth.

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  Intermediate Macroeconomics

  • Robert J. Barro; Angus C. Chu; Guido Cozzi, Robert Barro, Angus Chu, Guido Cozzi(Authors)
  • 2017(Publication Date)
  • Cengage Learning EMEA

    (Publisher)

  In the real world, governments levy a variety of taxes and pay out a variety of transfers, but none of these look like the lump-sum taxes and transfers in our model. Usually, a household’s taxes and transfers depend on its choices. This dependence motivates changes in behaviour. For example, taxes on labour income discourage households from working and earning income. Transfers to the unemployed motivate people not to be employed. Taxes on asset income discourage saving. Overall, the systems of taxes and transfers create substitution effects that influence labour supply, production, consumption and investment. In this section, we extend the equilibrium business-cycle model to incorporate some of these effects. However, before we extend the theory, it is useful to have an overview of Government Revenue. Government Revenue in the Eurozone The light blue graph in Figure 14.1 shows the ratio of total Government Revenue to gross domestic product (GDP) in the Eurozone from 1999 to 2014. The dark blue graph shows the part that can attributed to central governments, and the grey graph shows the part that can be attributed to state and local governments. Total Government Revenue y y remained close to 45% for most of the period and then rose slightly to 47% towards the end of the period. The ratio of central Government Revenue to GDP was reasonably stable throughout the period at 20%. Similarly, the ratio of state and local Government Revenue to GDP also remained fairly stable at 16%. The remaining part of the total Government Revenue comes from social security funds. y y Figure 14.2 gives a breakdown of total tax revenue, which is about 90% of total Government Revenue, by main categories. The first category is taxes on production and imports, which include taxes levied on products/services produced or transacted and other taxes on production. The most important type of taxes in this category is value added-type taxes.

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  Economics

  Theory and Practice

  • Patrick J. Welch, Gerry F. Welch(Authors)
  • 2016(Publication Date)
  • Wiley

    (Publisher)

  Crowding Out Occurs when borrowing by the federal government reduces borrowing by households and businesses. Summary 1. The two main categories of government expenditures are purchases of goods and services and transfer payments. Some government purchases are for public goods, which are provided for all of society and from which no one can be excluded. 2. Governments receive revenues from taxes and other sources, such as contributions for social insurance. The primary source of federal Government Revenue is the individual income tax. Taxes may be classified according to the relationship between the percentage of income taxed and the size of the income: A progressive tax has a direct relationship, a regressive tax has an inverse relationship, and the percentage stays the same for a proportional tax. 3. Tax reform sometimes occurs because of a need for additional government funding or for political reasons. A tax base is the thing on which a tax is levied, and the tax rate is the amount that is levied on the base. 4. Fiscal policy refers to changes in government expenditures and/or taxes for the purpose of influencing the levels of output, employment, or prices in the economy. Fiscal policy can be used to reduce unemployment by injecting more spending into the economy through increased government purchases, increased transfer payments, and/or decreased taxes. Demand‐pull inflation is reduced through decreased government purchases, decreased transfer payments, and/or increased taxes. 5. Fiscal policy is either discretionary or automatic. Discretionary fiscal policy is the deliberate adjustment of government purchases, transfers, and/or taxes by Congress to control unemployment or inflation. Automatic stabilization is the automatic change in some government expenditures, like transfer payments, and some taxes,

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  The International Handbook of Public Financial Management

  • Richard Allen, Richard Hemming, B. Potter, Richard Allen, Richard Hemming, B. Potter(Authors)
  • 2013(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  When tax structures remain relatively stable over time, revenue forecasting can largely bypass the need to focus on the behavioral responses to price effects arising from tax rate changes. These become core issues, however, in the context of the tax analysis required in the context of tax policy changes and the estimation and analysis of tax expenditures. Behavioral modeling of the effects of tax rate changes is necessary to estimate (i) changes in the tax revenues or the burden of the tax; (ii) the incidence of the tax burden; (iii) its excess burden or economic efficiency costs of taxation; and (iv) the transaction costs from compliance with and administration of the tax change.

  Revenue growth

  Governments have a basic interest in their revenue performance because they need to know whether they can finance a stable stream of public services over time. If public services are a normal good, then the demand for public services grows at the same rate or faster than the economy. If there is growing demand for social security, for example, revenues may need to grow even faster than the economy. Two basic measures of revenue performance of a particular revenue source or the combined domestic revenues of a government are (i) buoyancy and (ii) elasticity of revenues.

  Revenue buoyancy is a simple measure of the growth rate of the actual revenue collections over some span of years relative to the growth in the economy over the same period, usually measured by the growth of gross domestic product. Buoyancy shows whether the overall revenue collection as a share of the economy is rising, falling or remaining steady on the basis of whether the buoyancy is greater than, less than or equal to 1, respectively. The buoyancy of revenues reflects the combined effects of all changes to tax collection performance that happened over the observed time span – the collection performance would have been affected by changes in all the determinants of tax collections outlined in Box 20.2 (tax policy and economic changes) and Box 20.3

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  Preventing Fraud and Mismanagement in Government

  Systems and Structures

  • Joseph R. Petrucelli, Jonathan R. Peters(Authors)
  • 2016(Publication Date)
  • Wiley

    (Publisher)

  Fine revenue tends to be expensive to enforce and collect. One should consider the cost of collection and net revenue in any fine type system. The simple example of a traffic ticket which may appear on the surface as a low cost revenue source—until one considers the full cost of policing and court costs. These all contribute to the fishbowl of varying revenue streams. The question that needs to be asked is whether or not these revenues are matched and the payments are made for the intended purposes, which is to enforce compliance. What are the controlling oversight factors in place in the government system and structure to avoid potential fraud and mismanagement of these funds?

  Fees

  Governments apply fees to goods and services that they provide based in part on the idea that user pay is appropriate. They are commonly called user fees. Fees such as park admission costs, road tolls, driver's licenses, and vehicle registrations form a component of government funding that is growing due in part to a desire by elected officials in many areas to avoid raising taxes. Fee revenue can allow the government to provide special services to particular entities based on a cost recovery model of operation. People have options with user fees, whereas with taxation they do not.

  Fees have several advantages, as they can be targeted to produce revenue from people who want a particular service. In many cases, a government can actually provide useful services to the public at lower cost than private‐sector providers or individuals. For instance, in many areas of the United States, household water supply is provided by individual well drilling and pumping by homeowners. In regions with sufficient population density, the government can use the ability to borrow funds at favorable rates coupled with their organizational skills to build a general water supply system. Users can then pay for their access to and use of these systems based upon their volume of use. Fees can be set to encourage conservation and recover costs. The net effect is that a system that serves particular users can be funded while not burdening all taxpayers with the cost of a service some are not using.

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  Budgeting for Local Governments and Communities

  • Douglas Morgan, Kent S. Robinson, Dennis Strachota, James A. Hough(Authors)
  • 2017(Publication Date)
  • Routledge

    (Publisher)

  Exhibit 6.1 displays an estimate of the relative share of the major sources of local governmental revenues for all U.S. local governments in 2009. The exact balance of the different continuing revenue sources used by a local government will vary with the fiscal year. Economic cycles of growth and recession will cause an ebb and flow in sales, income, and business tax revenues.

  Exhibit 6.1 Local Governmental Revenues by Source, 2009, for All U.S. Local Governments

  Source: U.S. Census Bureau, 2009 . Table 1: State and Local Government Finances by Level of Government by State.

  The wide variation in size, state tax regulations, and purpose causes an individual local government to deviate from the national averages in Exhibit 6.1 . State property tax limitations may lessen the contribution of property taxes as a revenue source. State law may or may not authorize a jurisdiction to impose a retail sales tax or an individual income tax. Enterprise revenues from water and electricity utility sales, recreation facilities, or transit district fares may contribute an identifiable and substantial share of a government’s total revenues. The size and stability of enterprise revenues, as well as policy decisions on how to use enterprise profits to subsidize other governmental functions, determines the continuing revenue base on which to size an organization and its procurement.

  Revenues related to one-time activities and to one-time short duration revenues serve to supplement and complement a local jurisdiction’s continuing sources of funding. The flow of borrowed revenues from bonds and financial notes often will follow the start-up, construction, completion, and lifespan of capital construction projects. Grant revenues from the federal and state governments will increase intergovernmental revenues over the lifecycle of the grant. Some grants provide local governments with continuing revenues on a permanent basis, while other short-term grants last for only one to several years. Administrators and elected officials should recognize that short-term, one-time grants from public and private sources provide only a supplement to continuous revenues or recurring revenues. The revenue balance that supports a jurisdiction adjusts over time, but increasing the diversity of both recurring and one-time sources of revenue should stand as a strategic goal (NCSL 2007b ; Krane, Ebdon, and Bartle 2004

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  The Growth of Public Expenditure in the United Kingdom from 1870 to 2005

  • Clive Lee(Author)
  • 2011(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  The pattern of change in the composition of central Government Revenue since the late 1930s is shown in Figure 6.3. Miscellaneous sources of revenue, primarily government borrowing, were greatest during the Second World War after which they fell sharply so that, by 1960, they were equivalent to only a very small share of GDP. The largest com- ponent of central Government Revenue from the late 1940s was direct taxation collected by the Inland Revenue. It included taxation of income, differentiated for different levels of relative prosperity, death duties on the transfer of estates after death, and stamp duties levied on financial transactions. Direct taxation, denoted by central government category 2, rose during the war relative to GDP, but fell thereafter to less than 15 per cent under Conservative governments between 1951 and 1964, but increased in the later 1960s when the Labour party was in power, thereafter it followed a rather erratic path, falling under the Conserv- atives in the early 1970s but rising under Labour stewardship in the later 1970s and under the radical deflationary policies of the Conserv- atives in the early 1980s. For the rest of that decade the Conservatives Public Revenue 1938–2005 139 30.00 40.00 20.00 10.00 0.00 Value Year 2004–05 2001–02 1998–99 1995–93 1992–93 1989–90 1986–87 1983–84 1980–81 1977–78 1974–75 1971–72 1968–69 1965–66 1962–63 1959–60 1956–57 1953–54 1950–51 1947–48 1944–45 1941–42 1938–39 Customs/Excise Inland Revenue Motor Vehicle Tax S.E.T. Non-Domestic Rates Miscellaneous Figure 6.3 Composition of Central Government Revenue per cent of GDP 1938–2005 managed to keep direct taxation on a downward trajectory but economic recovery in the middle and later 1990s increased revenue from direct tax- ation as employment rates increased. After direct taxation, the principal contributor to central Government Revenue was the income generated from Customs and Excise Duties (CGR01).

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  The Economy in the 1980s

  A Program for Growth Stability

  • Michael J. Boskin(Author)
  • 2019(Publication Date)
  • Routledge

    (Publisher)

  VI

  The Role of Government in the Economy

  Passage contains an image

  7

  JOHN B. SHOVEN

  Federal Government Taxes and Tax Reform

  Tax and nontax sources of revenue. The economic inefficiency of heavy taxation. The negative income tax. Income tax indexation or integration. The consumption tax.

  The United States enters the 1980s with a growing dissatisfaction over the equity and efficiency consequences of its tax system. We are in the midst of a “tax revolt” with calls for major across-the-board rate reductions, complete revamping of the basis of tax computation, and broader appeals for controls on the size of government. Clearly, the rapid and accelerating inflation the country has experienced in the past decade has prompted much of the furor regarding taxes, as has the decline in the rate of growth of real income. This chapter will examine trends in the relative importance of various federal tax instruments, will discuss their economic impacts, and will address several major tax reform alternatives.

  HISTORICAL TRENDS IN SOURCES OF Government Revenue

  While it is natural to concentrate attention on the personal income tax, the fact is that this source provides only 45 percent of federal Government Revenue. This fraction has been relatively constant, as shown in Figure 1 , yet there have been major shifts in the relative importance of the other revenue sources. Social security’s “contributions” have risen dramatically; in 1953 these collections were one-fourth as large as the personal income tax, while today they are nearly three-fourths as big. The corporation income tax, on the other hand, has been steadily declining in importance, as shown in the figure. In the early 1950s it brought in over two and one-half times what social security did; by 1980 the social security system collected more than twice as much as the corporation income tax. Finally, indirect business taxes and nontax accruals (excise taxes, franchise fees, tariffs, deposits of earnings of the Federal Reserve System, etc.) have also significantly declined in relative importance. Given these trends, it seems appropriate that the social insurance system be given intensive examination, as is done in Chapter 10

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